The Academy Team

5 Questions to Ask Yourself Before Buying a Home

Here are five questions to ask yourself before you apply for a mortgage and start packing.

Exploring the idea of buying a house can be an exciting, nerve-wracking and uncertain time. Late night browsing on housing websites, trying to figure out which neighborhood to live in and what your priorities are can be as overwhelming as it is thrilling. To help you out in this life adventure, here are five questions to ask yourself before you apply for a mortgage and start packing:

1. Is the mortgage realistic?

Are you really in a place to buy a five-bedroom home with a pool? Sure, the listing price may have dropped a few thousand dollars in the past month, but be realistic when setting a budget and remember that any purchase is never a good deal if you can't afford it. When considering conventional mortgage rates and your long-term future, don't just try to picture yourself paying that amount for the rest of the year. Instead, picture yourself paying that mortgage every month for the next five to 10 years. Are you able to pay a sizable mortgage this year because you had a strong quarter with high commission earnings or a raise? Do you expect your income to increase or remain the same for the foreseeable future?

If you're stretching your budget, you can calculate some small sacrifices and adjustments to see whether a mortgage is feasible. When you consider eating at home more frequently and traveling less, however, also factor in how this will affect your quality of life. Most people could stand to tuck more money into their savings accounts or put it toward a mortgage, but if you love your weekly nights out and yearly tropical vacations, decide what's really important and whether the extra bedroom is worth it.

2. What will the commute be like?

Whether you're moving across the country for a new job or relocating to the suburbs for a bit more space, be sure to take into account your daily commute. Again, it's all about quality of life - an extra 10-15 minutes for better schools and a backyard is probably worth it, but if you're looking to increase your commute by 30 minutes or more each way, remember that this will affect your daily life in a tangible way. An extra hour each day, for example, adds up to about 250 hours per year.

There's no wrong answer here - if you're fine with a longer commute and have options such as express commuter trains or live in an area with less traffic than average, a few extra miles won't matter as much. Decide what you're comfortable with and how a longer commute may positively affect your budget or negatively affect your daily life and adjust accordingly.

3. Will you want to stay long-term?

Opting for a starter home as a first-time buyer is a great option to enter the housing market without breaking the bank, but that doesn't mean you have to settle. For instance, a smaller ranch home may be the perfect option if it's in a desirable area that you can picture yourself staying in for a few years.

Make sure you pay special attention to your surroundings. If you're moving from the city to the suburbs and enjoy the hustle and bustle of an urban area, you may want to move to a location with a thriving downtown area complete with walkable streets and access to coffee shops and restaurants. You're not bound to staying in a home for decades, but the moving and buying process is significant enough that you should try to imagine whether you'll be happy in a house and neighborhood for at least a few years.

4. Have you included extra costs?

It may not be as fun as looking for your dream home, but the devil is in the details, so make sure you're calculating the extra costs such as water bills, electricity, gas and home repairs. If you're a first-time buyer, you may not be accustomed to undertaking your own plumbing repairs (goodbye, landlord), so take note of any property changes you'll need to make upon moving.

What's more, according to U.S. News & World Report, homeowners will spend between 1% and 4% of a home's value on maintenance costs each year. That can add up to thousands each year. A little planning and budgeting can go along way, so keep these expenses in mind.

5. What's the future of your family?

Are you planning to have kids? Do you predict you may become a caretaker for an aging parent over the next couple of years? A home is a long-term investment, which means you should always keep the future in mind when deciding on buying a property. If you're a new parent, you should ask yourself whether you plan to have more children in the future. If so, should you get a house with an extra bedroom, or do you plan to move when your children are still young enough to comfortably share a room? Do you imagine your kids playing in a spacious backyard, or are nearby parks plenty for your family?

Or, if you've arranged to take care of a parent in the next few years, you may want to find a home with a first-floor bedroom with an easily accessible bathroom for someone with mobility issues. For that matter, if you're looking for a home to live in well into your retirement years, the same applies - what will your life look like in the coming years, and how will your living space fit into those plans?

There are many things to think through when buying a home, including these kinds of practicalities and long-term thinking. By taking your time while planning the next several years of your life and looking for a home that's worth the effort, you'll be able to enter the homebuying market with your eyes open, ready to find a home that's the perfect fit for your life.

Tips for First-time Homebuyers

Employing certain strategies can make buying your first home much easier. 

Buying a home for the first time can be an incredibly exciting but also stressful time for those hoping to enter the housing market. A house may be the largest purchase made in a person's lifetime, so it's important that the process go smoothly to prevent unnecessary worry or financial strain.

Here a few things shoppers should know when looking for their first home. Knowing what you want ahead of time can be greatly beneficial when looking for a home for the first time.

Consider what you want first

It's important to determine what kind of living space works best for you and your family. Do you need a home with bountiful yard space and a two-car garage? Or would a condo in multi-unit building suit your needs? What does the ideal residential neighborhood look like to you? Are there certain home amenities you could not live without? These are all considerations you must take into account before beginning any other phase of the home buying process.

Perform a credit check

Your credit score can affect the kinds of mortgage loans you can be approved for and what your interest rates and loan terms will be once you are approved. USA Today noted that you should check for and subsequently dispute any errors found in your credit report. You should also try to pay off any outstanding debts which could be lowering your score even further.

Lenders often run an inquiry into your credit history when opening a new credit account of any kind, which could adversely affect your score temporarily. To prevent this happening during mortgage applications, do not open any new credit accounts.

Financing and down payments

Determine the total cost of any prospective homes you look at – considering the property taxes, closing costs, insurance, maintenance costs and other factors. This can help guide you in assessing your budget for a potential down payment and your monthly house payment, according to Investopedia.

Weighing your mortgage options is another huge step in the home buying processes. Would a fixed conventional mortgage work best based on your income? Could an adjustable rate mortgage benefit you the most early on?

Down payments also do not have to be at the traditional 20%. Some lenders allow for less but this could result in higher overall costs and paying for private mortgage insurance, according to USA Today.

There may also be tax credits and lending programs for first-time homebuyers, veterans and residents of certain municipalities you can use to your advantage to help lower interest rates and down payment amounts.

Home inspection

Once your loans are approved and you find your dream home, a thorough inspection of the residence still needs to be conducted to ensure it's safe and up to your standards. Hire a professional to inspect the property. If any abnormalities are discovered that were not previously discussed, you generally have the option to rescind your offer or have your deposit refunded.

Here's What Buyers Need to Know About Home Square Footage

Square footage is a complicated number, and it’s one that confuses many homebuyers. Here are answers to your most pressing square footage questions.

The average home built in 2010 is 2,392 square feet, according to the U.S. Census Bureau, an increase of more than 100 square feet compared to one decade before. Over the years, American homes have generally gotten larger. In 1980, the average was just 1,740 square feet.

There could be a number of reasons behind these trends but to the typical homebuyer, explanations about why homes are a certain size may not matter as much as what that number actually means. Square footage is a complicated number - one that confuses many homebuyers. Does that 2,392 square feet include the basement? The tiny cupboard under the stairs?

Here are answers to your most pressing square footage questions:

Do basements count toward square footage?

It depends on several factors, including where the home is located, how it's situated in relation to the ground and what it looks like. Different counties have different rules about whether basements of any kind should count toward square footage, Realtor pointed out. Some say no; others say only if the basement is usable living space, such as a furnished family room or a bedroom.

Some counties also treat below grade basements differently than walk-out basements. Below grade basements are completely underground while walk-out basements have both an ingress and an egress. This may be the case if a home was built into a hill, for example.

Finally, it's more common for furnished basements to count toward overall square footage than musty, dark basements used primarily for storage or housing the furnace and hot water heater.

What about porches, garages or pool houses - are those counted?

Generally, no, these spaces are not counted, according to RedFin. One exception may be if the home's main heating system extends to the porch. If not, this is outside the count. Additionally, any room or building that requires you to leave the main finished area of your home is not counted, taking away garages, pool houses, guest cottages or any other outbuildings from the equation.

How is square footage actually calculated?

It's not necessarily someone with a yardstick carefully circling the perimeter of your home - but that could be one way. According to U.S. News & World Report, there are a few different methods to determine a home's square footage. The most common tactic follows guidelines set by the American National Standards Institute, which is done by measuring the exterior walls. In the simplest cases - perfectly rectangular homes - two perpendicular sides are measured, then multiplied. Most homes aren't perfect rectangles, however, and those corners of the home that extrude outside the area of the rectangle are measured separately.

It's important to note that, even though ANSI is the most common method, there are many different measuring techniques that appraisers use. Business Insider contributor and Realtor Brendon DeSimone related one story about a home seller who insisted on listing his home as 3,450 square feet - a measure the seller deemed fair and soon earned an offer. However, when the appraiser presented a square footage just 30 square feet less than the listing stated, the buyers argued for a final sale price that was $25,000 lower than their original offer.

What does DeSimone recommend to buyers and sellers to avoid confusing or frustrating square footage disagreements?

Sellers should avoid including the square footage in the listing price, he noted. Since another method of measurement could easily lead to a dispute, it's best to steer clear of this aspect early in the process.

Buyers should ask about square footage if it's important to them before securing a residential mortgage; when dealing with condo sales, for example, the price per square foot is an important data point. However, DeSimone also suggested that buyers not put too much emphasis on square footage and consider the other home qualities instead, like location, style and price.